Briefing: What does Applied Epic’s UK exit mean for competition?

Following Applied Systems’ shock decision to withdraw its Epic proposition from the UK, one of the key talking points has been competition in the broker management system (BMS) market.

Epic is a single, integrated and open application that provides capabilities to better manage customer relationships, sales opportunities, eTrading, financial accounting and policy administration.

It launched several years ago in the UK with lighthouse customer A-Plan, which is now Howden.

Applied Systems announced last week that it would withdraw Epic from the UK after conducting a strategic review, with the software house now redirecting investment into markets and products where business results are accelerating.

However, Epic exiting the market is likely to be disheartening to brokers.

This is because choice is key for brokers – Tom Needs, chief executive for Applied Systems Europe, recently told Insurance Times that the “UK is crying out for choice” and that since it was announced Epic would be exiting the UK, this “has been a recurring message I have received from the many conversations with brokers I have had”.

Exit reasons

So, why is Applied Systems removing Epic from the UK? Well, among reasons for the exit was complex product requirements and steep competition.

Applied Systems also said it had been especially challenging to align with insurers on agreements to distribute their products in the commercial lines segment.

There is no doubt the commercial market is a tricky area, with Joe Sultana, commercial director at IS2, having noted that it is “complex and nuanced and does demand a particular expertise”.

However, Applied Systems had been seeing growth in this area prior to its decision to withdraw Epic, with the software house previously saying it saw “record commercial lines eTrading growth in the 12 months to March 2024”.

The trading update, which was posted on 13 May 2024, showed that the number of brokers using Epic increased by just over 20%, whilst there was a 48% hike in gross written premiums traded on its integrated commercial lines eTrading platform.

Despite this, Needs said: “The challenge was always building our panel to a size appealing enough to win over more brokers.

“At Applied Systems, we want to be in the market to win. However, the consolidating nature of UK broking meant the competition was gaining market share by default.

“Ultimately, the cost and journey were too long and too significant to make it worthwhile, so we reached the very difficult decision to withdraw Epic from the UK market.

“We care about our customers and partners in the industry and want to do right by them, which is why we commit to maintaining the high level of service that we take pride in and following through with existing contracts until expiration.”

Competition

So, while figures suggested that brokers valued the Epic proposition and there was growth, Applied Systems clearly feels the UK BMS market has become a tricky area to compete in.

It is a concentrated area, with Adam Bishop, chief executive at SchemeServe, highlighting that “one or two names have dominated in the market”.

However, he added that “this should provide opportunity, not hinder it”.

Sultana, meanwhile, warned that withdrawing Epic “significantly reduces the choice brokers have when selecting their BMS and could slow down innovation”.

Innovation is key in any market as it results in customer benefits and growth – and more competition is likely to result in firms pushing for more products, services and innovations.

And, as Needs said, ”the industry cannot rely on one company to unilaterally provide choice. It takes many players from various segments of the market to commit to creating choice”.

So, Epic withdrawing from the UK BMS market can be seen as a blow. However, Bishop said there were still positives for brokers following Applied Systems’ announcement, with him saying: “They should rest assured there is competition alive and well in the software market and there are viable alternatives to the big players.”

And it will also be very interesting to see if any new players enter the market, with some perhaps seeing an opportunity now that Epic is leaving. Time will tell.